Is our country broke?

[kentuck]

Can anything good come from borrowing all this money or spending it on a "stimulus" package? Is the dollar worth anymore than the paper and ink that is printed on it? How does the dollar compare to other currencies around the world? Do they still think the dollar is a valuable currency?

Why not simply declare all debts null and void and start all over? Why bail out all these big shot bankers with money that is worth little and will be worth less once we give it to the banks? What is the upside and the downside to all these bailouts?

[cliffordu]

1. I think we are near broke getting ready to watch the bottom fall out.

But I always live in my happy place so I don't give a shit.

[ThomWV]

2. We are worse than broke, we are horribly in debt and have no means of self support

[ThomWV]

3. ** please replace the word "means" with the words "apparent will" **

[Romulox]

4. We are stealing from our grandkids, so that we can stay fat and happy. nt

[ananda]

5. The short answer: Yes, this country is both broke and broken.

Nothing will change until the idea of
equality becomes one of complete
inclusion and tolerance, meaning that
no human being is more deserving or
worthy than another, and no human,
public official, or corporate entity
is above the law.

[Bonhomme Richard]

6. We have been for quite some time.

It was all an illusion.
They just kept coming up with new ways to make us think we had money to spend.

[GoesTo11]

7. Bad, not broke.

The dollar is strong now. Investors who bet on it aren't expecting any massive devaluation in the future. Borrowing for good uses is still fine, but pissing money away is never good.

How broke are we? The national debt, not counting soc sec / medicare obligations, is about 12 trillion, approximately 1 year's GDP. That's like a person having debts equal to one year's income. Not a great situation, but you can work your way out of it.

Declaring all debts null and void would have pretty high costs. First, all pension funds that hold govt bonds and all IRA's and 401k's and more banks etc would go bust. In other words, the money would come from someone. Other portions of the debt are held by super wealthy, or China or UAE or whatever would not have a direct effect, but right now the US enjoys a lot of benefits due to its perceived strength (still). Without that, capital would certainly flee and countries would do whatever they want without regard to US desires. From a self-interested perspective, the cost to the US would probably exceed the several trillion dollars that would be saved - maybe it would reduce GDP by 25% or something.

We will have to work our way out of it through reduced standard of living - higher taxes - for the next generation, probably some devaluation / inflation that will hit debt holders to some extent - and will reduce what people can buy with wages that don't increase so fast and with dollars that buy less of foreign goods, and reduced public investment (following the immediate crisis-focused stimulus).

[taught_me_patience]

12. GDP is not income

Income is tax revenue. Tax revenue is about $2T, so we are probably 6x income. This is managable for now but once we reach 8-10x income, we are in serious trouble.

[Selatius]

16. You should replace GDP with annual tax revenue to be more accurate..

So, using tax revenue as the metric, it would be like a person making $50,000/year with a debt close to $250,000 or $300,000.

[GoesTo11]

20. Our government is in worse shape than the country overall.

There's a large asset base - highways, houses, offices, plants, farms, machines, utilities. Most of GDP is money people take home, so individuals as implicit owners of the national debt have this kind of debt load of 1 year's income per person, give or take.

The government, on the other hand, is, as you said, like someone with a debt of 6 times their income - and that used the debt to buy a big screen HDTV, a Hummer and a cruise around the world. The gov't does spend about $1 trillion / year on defense when you add it all up, more than the rest of the world combined, so there might be some possible savings there.

[The2ndWheel]

8. Start all over from when?

[Winterblues]

9. But "War" is supposed to be so damn good for business and our economy.

What we need is a bunch more "Wars" to really get this economy buzzing..If we could only spend five billion a day for war just think how well off all our communities would be..

[Taverner]

14. Wars only benefit military contractors

If you work for, say, PigglyWiggly, you're screwed

But if you work for Haliburton - your stock will rise

[Subdivisions]

10. Check out this video:

http://www.youtube.com/watch?v=pZsY1rFr_yw&e

[Taverner]

11. Some argue we've been broke since we went off the gold standard

Others say we went broke after creating the Fed Reserve...

Hard to say...really - every budget involves deficit spending, so its really hard to tell.

Add to that all the loans from China - but in doing so consider we can pay these back in dollars.

So should a margin call ever come, we can always turn on the printing presses...and you know where that would lead...





I am so glad we have an adult at the helm again...

[PowerToThePeople]

13. I would agree with that. n/t

[cherokeeprogressive]

15. Our country is brokEN.

No amount of money will return our economy to a manufacturing based one, rather than service based. No amount. Think we're going to put the millions of people who already lost their jobs back to work making solar panels? Newsflash, we're not. Think the big three automakers are going to come roaring back from the dead with fuel efficient and AFFORDABLE automobiles, thus re-employing the hundreds of thousands already laid off by all facets of the auto industry? Newsflash, they're not.

American Style Consumerism is taking a few decades off. Therefore, the downside to all the bailouts is that the money will disappear, to be found later in the pockets of people who were rich in the first place. We are absolutely throwing good money after bad, and it will cause the collapse of American society as we know it, for decades to come.

[madrchsod]

17. we are not "broke"

the direct infusion of money for the public good returns taxes on every dollar spent.

[terisan]

18. We are the same people, same geography & resources-part of immediate

problem is that nothing is moving because there is widespread uncertainty about what is likely to increase or decrease in value, and whether one will have secure stable income, or whether ones income will decrease. People put off decision-making on purchasing and we get the downward spiral.

But life goes on, eventually fear ends and lending, producing, and spending build up again--because that kind of economic system is age old, it always continues.

We have had many months, for example, of not dealing with some of the problems at hand such as the disposition of the troubled mortgages, after that we probably have a commercial real estate crisis coming and imho we should let it happen. We have more brick/mortar office buildings than we need for foreseeable future-barring advances in building design and structure that will make buildings obsolete.

Government is not adequately addressing the problem of the big banks/credit institutions--imho they should be laid to rest. Banks are in business to lend, if they don't lend they should bankrupt. The more local the bank the more likely it won't make bad lending decisions. Having Rubin, Summers, Biden in positions of power is holding us back from what needs to be done---they will be wanting more money to flow to big banks and in the end the banks will fail anyway and our indebtedness will have increased needlessly. Trying to prop up a financial sector too big for our economy won't work.

Large parts of the stimulus is simply throwing money at perceived problems, like the 20 billion computerized medical records-if may help employment between 2010 and 2014 but I don't except positive outcomes. Planning for high speed intercity rail would be something with a useful outcome.

Right now the dollar is better regarded than many other currencies, but Putin, for example, is beginning to try to move against it. His problem is that financial crises in so many countries still result in dollar looking like a better bet.

[LSK]

19. no, 5% of our people have it, we are just too chicken shit to go get it

[Subdivisions]

21. Has anyone watched this video? Surely it should elicit some sort

of response. This puts economic history in perspective. It is TERRIFYING! Where is the truth about just how bad things are?

[99th_Monkey]

22. Well, at least you have God on your side: see the "Year of Jubilee" in the Old Testiment

If God had her way, we would be forgiving all debts, returning all land back to
it's original owners, and releasing all prisoners every 50 years.
http://en.wikipedia.org/wiki/Jubilee_(Biblical)
http://en.wikipedia.org/wiki/Jubilee